The Credit Union National Association (CUNA) appreciates the opportunity to comment on the
advance notice of proposed rulemaking (ANPR) issued last month by the Department of Housing and
Urban Development (HUD). In the ANPR, HUD requested comment as to how single-family refinance
mortgages should be treated in connection with the affordable housing goals of Fannie Mae and
Freddie Mac in those years in which single-family refinances are particularly high. CUNA
represents nearly 90 percent of our nations approximately 9,300 state and federal credit
unions.

In the recently released final rule on the GSEs affordable housing goals for calendar years
2005-2008, HUD raised the current 50 percent low- and moderate-income goal to 56 percent in 2008,
the 31 percent underserved areas goals to 39 percent in 2008, and the more targeted, special
affordable housing goal from 20 percent today to 27 percent in 2008. We appreciate that HUD
reduced certain goals from those originally proposed in response to industry comments. However,
market experience has shown that the affordable housing goals are extremely difficult to achieve
when single-family refinances are high. Changes in the levels of single-family refinance
mortgages change the size of the affordable housing goals market. As single-family refinances
rise, the percentage of goals-eligible households in the market declines. This is because
higher-income households refinance more readily and goals-rich multifamily units decline as a
share of the total market.

We understand that HUD assumes the share of refinance mortgages will only reach a level of 35
percent of all single-family mortgage loans. However, refinance mortgages as a percentage of
single-family mortgages have rarely been this low in recent years and have, on average, been
significantly higher.

We recognize that the decline in interest rates in recent years has resulted in significant
refinancing activity. However, if the refinancing activity in future years remains significantly
above 35 percent, then the difficulty of meeting the housing goals may still be a problem.

We urge HUD to examine alternatives in order to alleviate this potential problem. One option
may be to remove single-family refinance mortgages altogether from the housing goals scoring
calculation. Another option may be for HUD to impose a refinance cap or incorporate some
mechanism that will make adjustments when refinancings are not at or near the 35 percent
threshold, as envisioned by HUD. For example, in years in which refinancings comprise a large
share of the single-family market, HUD could re-weight single-family refinance mortgages in the
housing goals scoring calculation so that they do not climb above a certain threshold.

Thank you for the opportunity to comment on the proposal regarding refinancings and their
impact on the affordable housing goals. If you have questions about our comments, please contact
Senior Vice President and Associate General Counsel Mary Dunn or me at (202) 638-5777.